The International Energy Agency, which was founded by rich industrial nations after oil shocks in the 1970s to promote secure and affordable energy supplies, says the world needs to stop drilling for oil and gas right now to prevent a climate catastrophe.
In order to reach net zero carbon emissions by 2050, the influential group said in a report Tuesday that investment in new fossil fuel supply projects must stop immediately, and no new coal-fired plants should be approved.
The dramatic recommendations are part of a detailed strategy that the IEA says would result in the world achieving the Paris climate agreement goal of limiting global warming to 1.5 degrees Celsius above preindustrial levels.
Why 1.5 degrees? Experts have repeatedly warned that exceeding the threshold will contribute to more extreme weather, greater sea level rise, wildfires, floods and food shortages for millions of people.
To prevent that, the IEA says these milestones must be hit:
- Immediate stop to new gas and oil projects.
- No new sales of fossil fuel boilers starting in 2025.
- Electric vehicles make up more than 60% of car sales by 2030.
- No sales of new internal combustion engine passenger cars by 2035.
- The global electricity sector reaches net-zero emissions by 2040.
- 70% of electricity generation from solar and wind by 2050.
There are major economic benefits to be had, according to the IEA. If the world follows the group’s roadmap, annual energy investment would surge to $5 trillion by 2030 from $2.3 trillion in recent years, adding 0.4 percentage points to global GDP growth.
The IEA is best known for authoritative reports on energy supplies and its advice to many of the world’s most powerful economies. That makes it harder for skeptics to dismiss its findings.
Dave Jones, global program lead at climate group Ember, said it marks a “major shift” for the IEA to “fully embrace the challenge of 1.5 degrees.”
“They have made this change because it’s demanded by politicians — politicians across the world are serious about 1.5 degrees, and they need the support of the IEA to deliver on it,” said Jones.
President Joe Biden has committed the United States to reducing its greenhouse gas emissions by 50%-52% below its 2005 emissions levels by 2030, for example. Britain, Japan and Canada have also unveiled new goals.
Some energy companies are preparing for a future in which oil and gas are a much smaller part of their business. European giants Royal Dutch Shell and BP are moving in this direction, for example, and are ahead of the US rivals.
BP has even said that demand for oil may have peaked in 2019.
Exxon Mobil is among the laggards. Late last year, it said that it would spend up to $25 billion a year through 2025 on capital investments and oil and gas exploration even after the pandemic sharply reduced demand for its products.
Jones said the IEA report signals “the start of the end” for the oil and gas industry. “It shows that any new fossil investment is made knowing it is inconsistent with a 1.5 degree world,” he added.
Investors are already taking action against Exxon. The company is facing a proxy fight by an activist group called Engine No. 1, which has nominated four candidates to its board and argues it needs to move faster on climate.
On Monday, the advisory firm Glass Lewis recommended that shareholders elect two of the four nominees put forward by Engine No. 1.
“Electing even a portion of Engine 1’s slate would send a clear message of shareholder dissatisfaction with Exxon’s recent direction and strategy,” Glass Lewis said, according to Reuters. It also said that Exxon’s energy transition plan was “generally insufficient and lacking in key areas.”
Mark your calendar: Exxon’s annual shareholder meeting is May 26.
Even more scale!
Monday’s edition of Before the Bell was all about scale. Some media companies have it (Disney, Netflix), and others need it (WarnerMedia and Discovery Communications).
Right on cue: Amazon is reportedly in talks to buy MGM, the vaunted film studio that was a staple of Hollywood’s Golden Age.
The studio could be valued at between $7 billion and $10 billion, according to The Information, which cited a person familiar with the situation. The New York Times and the Financial Times have also reported the talks.
Amazon did not immediately respond to a request for comment from CNN Business. MGM could not be reached.
Reports have circulated for years that Amazon has wanted to buy a big entertainment property to bolster its streaming video service. A studio makes sense because MGM projects could find a home on Prime Video.
Amazon doesn’t release a lot of specifics about Prime Video. But the umbrella Prime offering now has more than 200 million paid subscribers, the company revealed during its most recent earnings report, adding that streaming hours on Prime Video are up more than 70% over last year.
Business travel has disappeared. Will it ever come back?
For countless executives and salespeople, business trips have been a bedrock of corporate life. Employees needed to fly to meet clients, drum up new business and grab some face time with the boss at headquarters.
Then came the coronavirus pandemic, which grounded travelers and forced companies to find news ways of doing things. Zoom replaced face to face meetings, even if there is something awkward about video chats. Phone calls filled the gaps. Clients stayed clients, deals got done and revenue rolled in.
Now, with coronavirus restrictions easing in many countries, the question is how quickly business travel will rebound, and whether the pandemic and efforts to address the accelerating climate crisis will prevent the lucrative sector from ever making a complete recovery.
Road warriors will themselves play a crucial role in determining whether business class is full or mostly empty, as they negotiate a return to corporate life after more than a year working from home. Some — or many — could balk at missing out on date night or their kids’ football game.
“For a lot of people, frequent business travel has become more of a burden than a perk,” said Scott Cohen, a professor at the University of Surrey, told my CNN Business colleague Will Godley.
Investor insight: A weak recovery in business travel would be troubling for airlines, which have already seen their finances stretched to breaking point by the pandemic. While corporate travelers represent just 12% of passengers, on some flights they can generate as much as 75% of profit, according to PwC.
Baidu, Home Depot, Macy’s and Walmart report results before US markets open.
- US housing starts and building permits data at 8:30 a.m. ET.
Coming tomorrow: Earnings from JD.com, Lowe’s, Target, Cisco and L Brands.